Australia: Residential Focus - 14 March 2018 - Part 1: Unlicensed building

Last Updated: 17 March 2018
Article by Christine Jones, Eleanor Grounds and Christopher Yong
Most Read Contributor in Australia, September 2018

Unlicensed building and its consequences

The Supreme Court of New South Wales has issued a stern warning to builders who repeatedly operate unlicensed in breach of the Home Building Act 1989 (NSW) (the Act). In NSW Commissioner for Fair Trading v Rixon (No. 4) [2018] NSWSC 1, the defendant was convicted of contempt of court and sentenced to 18 months imprisonment (with a non-parole period of 12 months) for breaching orders prohibiting him from operating without a valid contractor licence.

Licensing requirements under the Act

Section 4 of the Act provides that a person must not contract to do any residential building work or specialist work except if they, or the partnership or corporation they're contracting on behalf of, holds a valid contractor licence authorising its holder to contract to do such work. Section 12 of the Act prohibits the actual performance of residential building work or specialist work without a valid licence.

Section 5 of the Act prohibits an unlicensed person from representing that they're prepared to do residential building work or specialist work. Furthermore, section 17 prohibits an unlicensed person from representing that they hold a valid contractor licence, supervisor certificate or tradesperson certificate when they do not.

The maximum penalty for breaching these sections is $22,000 for an individual and $110,000 for a corporation. Furthermore, individuals convicted of second or subsequent offences under sections 4 or 5 face a maximum penalty of $55,000 or 12 months imprisonment, or both.

Case study: NSW Commissioner for Fair Trading v Rixon

The defendant, Mr Rixon, had carried out residential building work on various occasions prior to April 2013 without holding a valid contractor licence. On 17 April 2013, consent orders were made (the Consent Orders) prohibiting Mr Rixon from:

  • contracting to perform residential building work without a valid licence;
  • representing that he or any person or entity involved with him holds a valid contractor licence, supervisor certificate or tradesperson certificate when they do not;
  • completing or supervising the completion of building work without a valid licence; and
  • requesting or accepting payment for the performance or proposed performance of residential building work without a valid licence.

On 9 May 2014, the Supreme Court of New South Wales convicted Mr Rixon of contempt of court for breaching the Consent Orders. Garling J sentenced Mr Rixon to 18 months imprisonment, suspended upon the condition of good behaviour, compliance with the Consent Orders and completing 300 hours of community service.

Throughout January and February 2015, Mr Rixon once again breached the Consent Orders by:

  • placing an advertisement for "labour and material under $1,000.00" under the name Affordable Home Services (an unregistered business name) in the local paper and in connection with this, using the ABN and ACN of another business, unbeknownst to its director;
  • attending the premises of a Mr Gibara to discuss demolishing a brick wall and undertaking further works including the installation of a new Colorbond fence and concrete driveway to the value of $21,000;
  • supervising two labourers he had hired through an online advertisement on Gumtree to perform part of the work; and
  • accepting four payments totalling $10,000 for works undertaken on Mr Gibara's premises.

The 'supervision only' exclusion

Mr Rixon submitted the work he undertook was merely supervisory since he only coordinated and facilitated the exchange of money from Mr Gibara to the operator of an earthworks moving machine responsible for the earthworks necessary to erect the Colorbond fence.

The Court rejected this submission for three reasons: the owner's evidence had not been challenged, Mr Rixon had not sworn an affidavit or given evidence and Mr Rixon had a number of convictions for offences regarding dishonesty.

Whilst the Court did not examine the supervision only exclusion from the definition of residential building work (Schedule 1 clause 2(3)(i) to the Act), it should be remembered that it excludes from the definition of residential building work the supervision only of residential building work:

  1. by a person registered as an architect under the Architects Act 2003, or
  2. by a person supervising owner-builder work for no reward or other consideration, or
  3. by any other person, if all the residential building work is being done or supervised by the holder of a contractor licence authorising its holder to contract to do that work.

Assuming that Mr Rixon sought to rely on (iii), this was not addressed in evidence.

Decision

Mr Rixon pleaded guilty to contempt of Court for breaching the Consent Orders. In sentencing, the Court held that:

Mr Rixon deliberately did the acts set out in the charges and did them knowing that they were in contravention of the [Consent Orders]. He could not have been in any doubt that he was not permitted to do the things the subject of the charges because only five months earlier he had been convicted of contempt for performing similar acts in breach of the same [Consent Orders] ... put in place for the purpose of protecting members of the public in accordance with the underlying intention of [the Act], from unlicensed builders. The contempt, therefore, by breaching the [Consent Orders] not only undermines the authority and integrity of the Court but had the effect of injuring members of the public sought to be protected ...

As a result, the Court sentenced Mr Rixon to a term of imprisonment of 18 months with a 12 month non-parole period.

Ultimately, the Court's first decision of the year is a stern warning for repeat offenders who undertake or supervise construction work without a contractor licence. Those seeking to circumvent the Act must be mindful of the Act's paramount obligation towards consumers, and the willingness of the Court to uphold these principles.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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Authors
Christine Jones
Eleanor Grounds
 
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